Question
On January 1, 2020SandhillCo. issued five-year bonds with a face value of $620,000and a stated interest rate of16% payable semiannually on July 1 and January
On January 1, 2020SandhillCo. issued five-year bonds with a face value of $620,000and a stated interest rate of16% payable semiannually on July 1 and January 1. The bonds were sold to yield8%.
Present value table factors are:Present value of 1 for5periods at8%
0.68058 Present value of 1 for5periods at16%
0.47611 Present value of 1 for10periods at4%
0.67556 Present value of 1 for10periods at8%
0.46319 Present value of an ordinary annuity of 1 for5periods at8%
3.99271
Present value of an ordinary annuity of 1 for5periods at16%
3.27429 Present value of an ordinary annuity of 1 for10periods at4%
8.11090 Present value of an ordinary annuity of 1 for10periods at8%6.71008
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Calculate the issue price of the bonds.(Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,582.)
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